Circuit City 2009 Annual Report Download - page 14

Table of Contents
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Events such as acts of war or terrorism, natural disasters, changes in law, or large losses could adversely affect our insurance
coverage and insurance expense, resulting in an adverse affect on our profitability and financial condition.
We insure for certain property and casualty risks consisting primarily of physical loss to property, business interruptions resulting
from property losses, worker’s compensation, comprehensive general liability, and auto liability. Insurance coverage is obtained for
catastrophic property and casualty exposures as well as those risks required to be insured by law or contract. Although we believe
that our insurance coverage is reasonable, significant events such as acts of war and terrorism, economic conditions, judicial
decisions, legislation, natural disasters and large losses could materially affect our insurance obligations and future expense.
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Changes in accounting standards or practices, as well as new accounting pronouncements or interpretations, may require us to
account for and report our financial results in a different manner in the future, which may be less favorable than the manner used
historically.
A change in accounting standards or practices can have a significant effect on our reported results of operations. New accounting
pronouncements and interpretations of existing accounting rules and practices have occurred and may occur in the future. Changes to
existing rules may adversely affect our reported financial results.
Risks Related to Our Company
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We rely to a great extent on our information and telecommunications systems, and significant system failures or outages, or our
failure to properly evaluate, upgrade or replace our systems, or the failure of our security/safety measures to protect our systems and
websites, could have an adverse affect on our results of operations.
We rely on a variety of information and telecommunications systems in our operations. Our success is dependent in large part on the
accuracy and proper use of our information systems, including our telecommunications systems. To manage our growth, we
continually evaluate the adequacy of our existing systems and procedures. We anticipate that we will regularly need to make capital
expenditures to upgrade and modify our management information systems, including software and hardware, as we grow and the
needs of our business change. In particular, our financial and retail point of sale systems will be replaced during the coming years.
The occurrence of a significant system failure, electrical or telecommunications outages or our failure to expand or successfully
implement new systems could have a material adverse effect on our results of operations.
Our information systems networks, including our websites, and applications could be adversely affected by viruses or worms and
may be vulnerable to malicious acts such as hacking.
The availability and efficiency of sales via our websites could also be adversely
affected by “denial of service” attacks and other unfair competitive practices. Although we take preventive measures, these
procedures may not be sufficient to avoid harm to our operations, which could have an adverse effect on our results of operations.
• We rely on third party suppliers for most of our products and services. The loss or interruption of these relationships could impact
our sales volumes, the levels of inventory we must carry, and/or result in sales delays and/or higher inventory costs from new
suppliers. Coop advertising and other sales incentives provided by our suppliers could decrease in the future thereby increasing our
expenses and adversely affecting our results of operations and cash flows.
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